Nokia, the Finnish telecoms equipment giant, is planning to close nearly all of its operations in mainland China by the end of 2026, laying off the bulk of its local workforce in phased batches as it cedes ground to domestic rivals Huawei Technologies and ZTE, according to sources familiar with the matter. The move marks one of the most significant foreign telecom retreats from China in decades, ending a presence spanning more than four decades.

What Nokia is doing

The company reportedly announced the plan to scale back mainland China operations earlier this month via an internal online video conference held from its Helsinki headquarters. Teams across both Nokia's mobile networks and network infrastructure business units in China are set to be cut in stages, with the majority of lay-offs expected to be completed before year end, a Shanghai-based source said.

Only after-sales services will be retained in the country, a move that one source described as 'basically a gradual exit from the market.' Nokia had maintained sites in major cities including Beijing, Shanghai, Hangzhou, Chengdu, and Qingdao.

Scale of the workforce impact

Nokia's annual report showed the company employed approximately 7,200 staff across mainland China, Hong Kong, and Taiwan at the end of 2025. The precise number of employees affected by the current round of cuts has not been disclosed. A former Nokia employee based in Shanghai, who had worked in the software testing division, confirmed leaving the company in recent weeks with an 'N+3' severance package — compensation calculated on years of service plus three months' additional pay.

The competitive backdrop

The retreat reflects the increasingly difficult operating environment for foreign telecoms vendors in China, where state-backed champions Huawei Technologies and ZTE have systematically displaced Western rivals across 5G infrastructure contracts. Nokia had operated in the country through its joint venture Nokia Shanghai Bell, in which state-owned China Huaxin holds a stake, giving it a structural foothold that nonetheless proved insufficient to arrest the decline.

The broader US-China tech war has accelerated this dynamic, pushing Chinese carriers to prioritise domestic suppliers on national-security grounds and as part of explicit government policy. Other Western technology firms, from IBM to Microsoft, have also been recalibrating their China exposure amid the same geopolitical headwinds.

What's next

With only an after-sales skeleton crew expected to remain, Nokia's effective exit leaves a significant gap in the foreign vendor ecosystem inside China — though the commercial impact will be felt more acutely in Nokia's own revenue mix than in Chinese carrier networks. Investors and analysts will be watching whether the company reallocates the freed-up resources toward higher-growth markets in Southeast Asia, India, and the Middle East, where competition with Huawei remains fierce but the political calculus is less binary.